Mar 02, 2017 News Comments Off on VAT on private education fees remains in effect
-but Govt. reportedly not opposed to possible review
Although it has been the subject of protest action and a petition against it which has gained the attention of Government, the 14 percent Value Added Tax (VAT) announced for private school tuition fees remains in effect.
Despite the many concerns, Government is reportedly not prepared to reverse this decision.
However, based on reports reaching this publication, following a Ministerial meeting, Government has indicated its willingness to possibly review the instituted VAT on private education. According to reports, Government has agreed to engage private educational institutions about fees and taxes.
According to information disseminated by Government the majority of the 50-odd private educational institutions in operation have over the years failed to pay taxes. There are speculations that Government could be willing to waive the 14 percent VAT on the tuition fee if the private schools decide to comply with taxation laws.
Minister of Finance, Mr. Winston Jordan had related that while Government was desirous of lowering the 14 percent VAT implemented by the previous administration it was forced to institute the VAT on education in order to widen the tax base. By so doing he noted that Government was forced to tax items of goods and services that were not previously taxed.
Currently the imposition of the VAT on private tuition fees falls on the payer (that is the parents of students attending these institutions) rather than the payee (the owners of the educational institution).
“The argument has been made, at least by Dr. Brian O’Toole [Director of School of the Nations], that some parents would not be able to afford it. Perhaps, this argument has some merit. But, is the solution the complete removal of the VAT or to find creative ways to overcome it?” questioned Jordan in correspondence seen by this publication.
Minister Jordan therefore asserted, “One such solution is the absorption of the 14 percent VAT by GT&T. Note carefully, in this case, that though it appears altruistic, the absorption merely represents a reduction in the payment of corporate taxes due by the telephone company.
“A similar arrangement has been implemented by the CJIA, which has decided to absorb the VAT to be applied when parking at the airport. In like manner, the private educational institutions may wish to consider similar approaches,” the Finance Minister said.
He added that prior to the recent amendments, educational materials were zero-rated, meaning that private school providers had to claim a refund of VAT imposed on a wide range of school supplies. Now, all of these items have been moved to the Exempt Schedule, which means that no VAT is charged and none has to be refunded.
“Please note that the entire list of educational materials in the previous Schedule has been retained in the new Schedule. This is important because there has been idle talk of geometry sets, dividers and textbooks, among others, now attracting VAT. This is totally false, as can be easily referenced from the Exempt List that was published on a number of occasions in all of the dailies,” Minister Jordan noted.
As of 2016, there were 54 private education institutions registered with the Guyana Revenue Authority, and according to Minister Jordan, few of these “were tax compliant, including submission of yearly income and corporate tax returns.”
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